How Does Cross-Margin Differ from Isolated Margin in Derivatives Trading?
Isolated margin allocates a specific, limited amount of collateral to a single position, isolating the risk. If the position is liquidated, only that margin is lost.
Cross-margin uses the entire available balance in the trading account as collateral for all open positions. This allows positions to share margin but risks the entire account balance in a major liquidation event.
Glossar
Isolated Margin
Leverage ⎊ Isolated margin represents a risk management protocol within cryptocurrency derivatives exchanges, enabling traders to allocate specific capital for margin requirements on a per-contract basis.
Account Balance
Valuation ⎊ Account balance, within cryptocurrency, options, and derivatives, represents the net liquid value accessible to a participant, factoring in realized and unrealized profit and loss across open positions and collateral held.